The Revocable Living Trust: A Smart Move for Real Estate Investors

By Michael J. "Mick" McGirr, Esq., Founding Partner, Phocus Law

If you’re a real estate investor, you’ve likely spent time structuring your business entities—LLCs, S-corps, partnerships—you name it. But have you considered the foundation of your entity structure? Enter the revocable living trust, an often-overlooked tool that can make life (and the transition of your hard-earned assets) significantly smoother.

Skip the Probate Hassle—Your Heirs Will Thank You

Let’s be real, no one wants to think about what happens to their investments after they’re gone. But failing to plan for it means leaving your loved ones with a mess. Without a revocable living trust, your real estate portfolio could get tied up in probate court, a lengthy, costly, and very public process. By placing your assets into a trust, you ensure that when the time comes, your properties transfer quickly and seamlessly to your heirs, bypassing the probate process altogether.

Not Bulletproof, But Close Enough

Now, let’s talk about the elephant in the room—creditor protection. It’s true: a revocable living trust doesn’t provide ironclad asset protection like an irrevocable trust might. However, many creditors are deterred from chasing assets held in trusts because it’s just more complicated. There’s a perception (and sometimes a reality) that going after a trust-owned asset is more trouble than it’s worth. While this isn’t a guarantee, it’s often enough to make a creditor think twice before pursuing collection efforts.

Your Entity Structure Needs a Solid Foundation

Many investors focus on LLCs and corporate structures to manage risk and liability, but that’s only part of the picture. Think of the revocable living trust as the cornerstone of your entity structure—ensuring not just operational efficiency but also ease of succession. Whether you own one rental or a sprawling portfolio, having a trust in place keeps things organized, private, and hassle-free for those who will take over your assets.

Final Thoughts

A revocable living trust isn’t just for retirees or the ultra-wealthy—it’s an essential tool for real estate investors who want to protect their legacy, avoid probate headaches, and add an extra layer of perceived deterrence against creditors. If you haven’t implemented a trust as part of your structure yet, now’s the time to consider it.

At Phocus Law, we help AZREIA members design legal structures that work for their investments and their families. If you’d like to discuss how a trust fits into your real estate strategy, reach out—we’re happy to help. Reach out to Sam Richardson, who heads up our estate planning team, at [email protected] or by phone at (602)457-2191.